Ulta Beauty has announced an exclusive collaboration with Universal studios as part of its holiday product offerings.
The collaboration for the film “Wicked,” which releases in November, includes a variety of limited-edition products and tools from a variety of beauty brands, according to a company statement. Participating brands include Conair, OPI and r.e.m. beauty by Ariana Grande, who plays a leading role in the film.
In an industry where trends matter, the “Wicked’ collaboration could be the first step in bolstering holiday growth for Ulta.
“I don’t think it’s as big as some of the prestige rollouts, but every little bit of newness helps,” said Susan Anderson, a senior analyst at Canaccord Genuity with a buy recommendation for Ulta, of the collaboration.
The products will be available in Ulta Beauty stores and online.
The collaboration comes amid a difficult time for the company, caused by a lack of consumer confidence due to inflationary pressures and increased competition in the sector from Kohl’s deal with LVMH-owned Sephora. Ulta Beauty reported weaker than expected second quarter results, with comparable sales down 1.2 percent in the second quarter compared to an 8 percent increase the previous year.
Such factors have hurt its stock performance. Ulta’s stock has declined 17.5 percent over the year, versus a 13 percent growth for the S&P 500 Consumer Discretionary sector index.
Many firms have started to downgrade the stock. TD Cowen is the most recent firm to drop its rating from buy to hold, citing a slowing industry and increased competition in the sector.
But other analysts say not to give up on the stock just yet.
“Ulta has had a little bit of a bump in the road as Sephora has massively expanded its store base,” said Anderson. “But that’s really coming to an end now, because there’s only so many Kohl’s that they can go into.”
The upcoming holiday season could also help Ulta, especially due to lowered interest rates. Prior to the Federal Reserve’s 0.5 percent interest rate cut, consulting firm Bain & Company forecasted a 3 percent growth in retail sales over the upcoming holiday season, with e-commerce sales driving much of it. This is down from 4.2 percent in 2023, but report author Andrew Cheris noted in a statement that interest rate cuts “could help bolster consumer confidence in the months ahead,” increasing the growth.
“If retailers want to beat these gloomy expectations, they will need to get an early start, emphasizing value and finding ways to delight shoppers during a stressful season,” Cheris said in a statement.